Audit finds KC district fixes many flaws, but still has work to do

The Kansas City School District fixed millions of dollars worth of operational flaws the past two years but still has work to do, according to a state audit released today.

The audit, which began in early 2010, tracked several concerns the district had already begun addressing such as controlling purchases by principals and teachers, eliminating excessive vendor contracts and tightening monitoring of activity funds at its schools.

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But the district has kept poor records of its inventory as it has been closing schools and storing and moving equipment between schools, the audit found. It also did not competitively bid or effectively monitor some contracts.

Overall, the district received a “fair” rating, meaning some operations need to be improved in some areas.

State Auditor Tom Schweich and his staff completed the audit started by former Auditor Susan Montee, who took the opportunity provided by a change in state law that allowed the auditor to review school districts without being petitioned.

Before the change in the law, residents had to come forward with signed petitions calling for a school district audit.

When Montee announced the plan in the fall of 2009 to audit Kansas City, she said that there were no specific concerns but that the timing seemed right because a new administration had just come into office with then-Superintendent John Covington.

The school district cooperated in the review.

Montee released part of the audit in September 2010, reporting that the district’s financial condition had stabilized and that the drastic cuts that had been made closing schools and trimming staff prevented what would have been a “financially distressed position.”

The full audit credited the school district for making several money-saving changes in its operations. The money saved goes well beyond the amount that would have been realized because of the district’s loss of students.

The district in 2010 eliminated the use of most purchase cards. The amount of purchases by teachers and principals for student incentives such as trophies, gift cards, electronics and event tickets fell from $929,000 in 2008 to $187,000 in 2010.

The amount spent on meals while school groups were traveling fell from $924,000 to $330,00 in that same time.

The district also has improved its monitoring of overtime costs, resulting in a reduction from $2.9 million in 2008 to $1 million in 2010.

Another expense that the auditors thought was high — Covington’s $800-a-month car allowance — left with Covington’s resignation. Interim Superintendent Steve Green’s contract gives him no car allowance, but requires that he have access to a district vehicle.

The district also has improved internal controls of school activity funds, the audit noted, after district officials became aware of unauthorized disbursements by former Lincoln College Preparatory Academy Principal Jamia Dock totaling $58,000.

The district removed Dock as principal in 2009. She has since been charged with theft and is awaiting trial in Jackson County Circuit Court.

The audit gives a mixed review of the district’s handling of service contracts.

Some of the district’s main vendors — the Local Investment Commission’s after-school program, legal counsel from Husch Blackwell Sanders and transportation management by TransPar — have continued serving the district without competitive bidding.

The Local Investment Commission provides programs for several area school districts. The district has taken measures to reduce its reliance on the outside law firm.

Other contracts that were listed as concerns were previously ended by the district, including its Success for All reading program and a computer servicing contract.

Two large contracts were eliminated when the district took those services in-house — a contract for human resources management and a contract for food service.

The audit credited the school district for making a small profit with its in-house food program after it had been losing $2 million a year previously.

One area that the district admitted in its response that needs improvement is its management of its property inventory. Auditors were unable to effectively account for thousands of items valued at a total of more than $2.5 million for both 2009 and 2010.

Many of the discrepancies occurred because of the closing of 30 schools over the past two years, the district responded.

“The massive amount of movement of property during the short time did not allow for a comprehensive and orderly inventory of property movement,” the district replied.

The auditors also noted that the district has not realized some available cost-savings in transportation, but the district replied it intends to bear some extra costs to help assure more children attend class.

The district transports children who live more than 1.5 miles from school, though state law allows districts to extend the walk zone to more than three miles from school.

“The safety and attendance of our children, not the cost of transportation, is our primary concern,” the district said.